WASHINGTON — Few advisors always talk with clients about key retirement and retirement income issues, researchers from LIMRA said at a press conference here.
That is a finding from a 2009 online survey of 942 retirees ages 55 to 80 who have $200,000 or more in household investable assets.
According to the survey, over half of retirees say most advisors are not helping the retirees with various aspects of retirement income.
The finding counters that of another LIMRA survey from 2009, said Marie Rice, director-retirement research at LIMRA, Windsor, Conn. This was a survey of 922 advisors, and it found that many advisors say they are helping clients on retirement, she said.
In that second survey, 90% of the advisors said they are actively involved in retirement income planning, and 73% said they do expense planning, Rice said.
It’s not clear whether the much different viewpoint of retirees reflects a disconnect or a lack or recall, Rice said. However, the researchers did find that registered investment advisors and registered reps of broker-dealers were more likely to discuss many retirement issues with retired clients than were other types of advisors, she said.
Advisors need to remind themselves that “clients won’t always hear or understand what the advisors are trying to say,” Rice said.
The LIMRA researchers have reached the conclusion that the retirement industry needs to keep consumer education about retirement and finances in the forefront.
To this end, Rice said LIMRA is recommending that pre-retirees and retirees start asking their advisors some simple questions. It is also recommending that advisors prepare themselves to answer those questions.
The recommended questions are:
- When should I retire?
- How do I plan for my expenses and income?
- Which funds should I draw from first?
- What required minimum distributions do I need to perform and when?
- What risks should I plan for when I retire?
Other survey findings:
- Nearly 2 in 5 homeowners have first or second mortgages, and 17% have home equity loans. Of these owners, nearly half owe over $100,000.
- Of the 73% of retirees who do use advisors, only 45% said they have received advisor assistance with minimizing exposure to retirement risk; only 42% with deciding which assets should be withdrawn for income; 41% with minimizing the amount of taxes paid in retirement; 29% with determining which assets to use for income first; 24% with planning for required minimum distribution; and just 13% with deciding when to retire.
LIMRA is now calling on its member insurance companies in an effort to spur them to do more in the area of advisor education on income planning, said Paul Henry, director-client services. “We’re getting a good reception,” from both independent and career agency companies, he said.
Companies are always looking for ways to improve productivity, grow profit margins and manage business risk, Henry explained. Training and education that helps advisors interact better with clients will help in those areas, he said.
Over half of retirees say most advisors are not helping the retirees with various aspects of retirement income, Rice said.